Executor - investing an 'Adult' trust fund

lgslimax

Thanks for the replies. We don't have a Skipton or a Yorkshire Building Society in our town. I went into the Coventry Building Society today to inquire and I think they will be able to sort me out with a trust account once I have got certified copies of the will and the statement of the estate from the solicitor. We will pay tax on the interest.

xylophone

You have noted that it is likely that you must make a tax return?

If this is not a bare trust then you need to pay tax in a certain way - you may need to issue the beneficiary with a certificate of tax paid so that if appropriate, he can reclaim tax.

See http://www.hmrc.gov.uk/manuals/intmanual/intm367780.htm

You do need to know what kind of Trust this is - if the solicitor cannot tell you then he needs to consult a colleague who understands Trusts?

xylophone

http://www.lawskills.co.uk/articles/2010/01/the-nutty-problem-of-contingent-pecuniary-legacies/

may be of interest.

SeniorSam

I am really amazed that the solicitors have not clarified theTrust situation. This cannot be a Bare Trust as the age limit is stipulated in such a Trust. Normally this is a Discretionary Trust, where the Trustees are responsible for the capital until the beneficiary reaches the specified age.

With a Discretionary Trust, a tax return needs completing each year, but the beneficiary will be able to reclaim, the tax if they are a non taxpayer.

If you call the Revenue, they will explain in more detail for you.

Sam

lgslimax

This is the response I had from the solicitor:

As far as HMRC is concerned, for income tax purposes it is a bare trust.

You do not need to report to the Revenue with regard to the income which, as it is being invested in a building society, will be taxed at source. When you get the tax deduction certificate after the end of the financial year, you should let Joshua have a copy and it should be included on his tax return, if he has to do one. As it will already have been taxed at the basic rate, there would be no tax to pay except if he earned enough to qualify to pay tax at 40% (over £42,385).

So, really all you need to do is to invest the money, transfer the income to him if he wants it (he may prefer it to stay in the account and build up), and then close the account and give him any balance when he reaches the age of 25.

I have an appointment with Barclays next week as they offer Trust accounts.

xylophone

But the solicitor has already told you that the trust is not a bare trust?

Do you know the exact wording of the will?


I would strongly suggest that you read the link in my post 14 above.

See also http://taxbar.com/documents/Bare_Trusts_Nicola_Shaw.pdf

"Likewise, if B’s absolute entitlement is subject to some contingency (for
example, on B attaining the age of 25) the trust will not be a bare trust until the
contingency is satisfied even though B might still be sui juris. "

With regard to Barclays, we have a family trust for which Barclays provide a current account in the name of the Trustees but it is non interest bearing.

With regard to the income, does the Deed of Trust require the Trustees to pay income to the beneficiaries? Or is this discretionary?

My instinct would still be to get this checked in writing with HMRC.